Thursday, October 22, 2009

Accountability is beginning to prevail...

First the SEC, now MLB:

Missed calls prompt umpire switch for World Series



NEW YORK (AP)—Stung by a rash of blown calls in the playoffs, Major League Baseball is breaking tradition and sticking with only experienced umpires for the World Series.
Longtime crew chiefs Joe West, Dana DeMuth and Gerry Davis, along with Brian Gorman, Jeff Nelson(notes) and Mike Everitt will handle the games, three people with knowledge of the decision told The Associated Press this week.
The people spoke on condition of anonymity because an official announcement has not been made.
In 24 of the last 25 World Series, the six-man crew has included at least one umpire working the event for the first time—baseball likes to reward newer umpires, plus replenish the supply of umps with Series experience.
In each of the last two years, there were three new umps working the World Series.
CB Bucknor was in line to work the World Series for the first time this year. But he missed two calls in Game 1 of the division series between the Red Sox and Angels, damaging his chance to get picked, one of the three people said.
Umpiring mistakes caused anxious moments for MLB in the first two rounds: Phil Cuzzi’s foul call on a drive by Joe Mauer(notes) that was fair by a foot, Jerry Meals’ error on a ball that bounced off Chase Utley’s(notes) leg, Dale Scott’s miss on a pickoff and Tim McClelland’s call on a tag play, among others.
Scott missed again Thursday night in Game 5 of the AL championship series, ruling New York’s Johnny Damon(notes) out after he clearly beat Angels first baseman Kendry Morales’(notes) toss to pitcher John Lackey(notes).
The problems have ramped up calls by fans for expanded use of instant replay. Loading up with veteran umpires, however, is no guarantee of getting it right. McClelland missed an obvious double play Tuesday night in the ALCS.
West, DeMuth and Davis each have worked three World Series and have been major league umpires for more than 25 years. Gorman, Nelson and Everitt all have called one World Series, and have been on the big league staff for at least 11 years.
At least a pair of first-time World Series umpires have been on each of the last five crews. Starting in 1983, the only crew that did not include a World Series rookie was 1997.
World Series umpires are chosen from the pool of 24 umpires who work in the first round, with those two dozen picked on merit. ALCS and NLCS umpires aren’t in play, because umps don’t work in consecutive rounds of the postseason.

Wednesday, October 21, 2009

A hearty applause to the SEC for taking the following action...

SEC suspends Florida-Arkansas crew

BIRMINGHAM, Ala. (AP)—The Southeastern Conference has suspended officials from last weekend’s Arkansas-Florida game after the crew was involved in its second controversial call of the year.
Referee Marc Curles’ crew called a personal foul on Arkansas defensive lineman Malcolm Sheppard in the fourth quarter as the Gators were rallying for a 23-20 victory. The league said there was no video evidence to support the call.
The same group of officials called the LSU-Georgia game earlier this month, which included a late unsportsmanlike conduct penalty the league said shouldn’t have been called.
“A series of calls that have occurred during the last several weeks have not been to the standard that we expect from our officiating crews,” SEC commissioner Mike Slive said Wednesday. “I believe our officiating program is the best in the country. However, there are times when these actions must be taken.”
SEC associate commissioner Charles Bloom said this is the first time the league has publicly suspended a football crew like this.
The SEC says the crew will be removed from its next scheduled assignment Oct. 31 and will not be assigned to officiate as a crew until Nov. 14.
The league said the crew’s bowl assignments could also be impacted.
“The entire crew shoulders responsibility for each play. I have taken this action because there must be accountability in our officiating program,” Slive said. “Our institutions expect the highest level of officiating in all of our sports and it is the duty of the conference office to uphold that expectation.”

Tuesday, October 20, 2009

Even an Indy 500 winner understands the significance of a Customer Service Dept.

From the book, Winners are Driven by Bobby Unser.  Excerpt from chapter 6, titled Races Are Won In The Pits:  Unser's race team working with Roger Penske's team holds the Indy 500 track record for a fueling and tire change pit stop of 8 seconds.  To put this in perspective, it takes 10 seconds for a telephone to ring 3 times.  Penske's pit crew provided a car with approximately 35 gallons of fuel and changed all four tires in the same amount of time you would expect a good business to answer its customer service line -- in less than 3 rings.

While your support staff may not directly be revenue generating, avoid the common mistake of viewing them purely as an expense item.  Everybody's a producer on the team.  A properly trained and motivated support staff can gain you a considerable amount of "soft driving time."  (pg. 91)

Thursday, October 15, 2009

A lesson in leadership running the Pentagon

Robert Gates: Overhaul the Pentagon

By Noah Shachtman Email 09.21.09
Secretary of Defense Robert Gates
Photo: Brian Finke
From his earliest days as secretary of defense, Robert Gates kept a little countdown clock in his briefcase. It ticked off the days, hours, minutes, and seconds until January 20, 2009, when President George W. Bush would leave office and Gates could retire to his secluded home in the Pacific Northwest, 43 years after entering public life. He'd be punting some tough issues to the next guy. But that wasn't his problem.
Until it was. Barack Obama prevailed on him to stay—in the midst of economic turmoil and two ongoing wars, the new president needed a low-key, no-surprises steward at the Pentagon.
That's not what the president got. More than five months after his countdown clock hit zero, Gates has turned out to be neither a caretaker nor merely the guy tasked with cleaning up the mess Donald Rumsfeld made of the Department of Defense. Instead, Robert Gates has emerged as the most radical secdef in generations, upending the politics of national security, scrapping the traditional ways gear gets to troops, and defying the military-industrial complex.
Gates denies all that. Mostly. As he leans over a small desk crammed into a cabin on board a modified 757, he comes across as just another Washington big shot. His starched white shirt has two pens in the breast pocket. His blue jeans are hiked up a bit too high on his waist, like he's been wearing suits too long to remember where dungarees belong. He waves off talk of massive change, of revolutions in military affairs.
Rather, he offers what sounds like common sense: The military needs to fight today's battles, not tomorrow's. Generals are always fighting the last war, the old saying goes, but in reality the Department of Defense has the opposite problem. While a relative handful of troops fight and die "downrange" in war zones, a massive bureaucracy develops strategies, spends money, and—most especially—builds weapons, all in the name of theoretical, decades-hence showdowns. It's a $500 billion perpetual motion machine.
Every secdef talks about changing the Pentagon, then almost immediately gets stymied by bureaucratic resistance. Only this time, Gates' talk is turning into action—a Gates Doctrine, if you will. Its core tenets: Base policy on the wars that are most likely to happen and the technology that's most likely to work. Stop trying to buy the future when you can't afford the present. With a White House veteran's feel for Washington, a love of policy, a penchant for secrecy, and an old man's sense of the ticking clock, the silver-haired administrator has become the most dangerous person in the military-industrial complex. "I've referred to myself as the secretary of war, because we're at war," he says in a nasal Kansas twang, raising his voice over the roar of the plane's engines. "This is a department that principally plans for war. It's not organized to wage war. And that's what I'm trying to fix."
On the Sunday before the midterm elections in 2006, while guests mingled in the main house at the president's ranch in Crawford, Texas, for the first lady's 60th birthday party, Bush took Gates into his private study and asked him to take over the Defense Department. Gates was a national security pro, having served in the White House and at the CIA for six presidents. He was a trusted protégé of Bush Senior and had continued to sit on several important advisory panels even after leaving DC in 1993.
As Bob Woodward told it in his 2008 book The War Within, Gates and the president talked about increasing the size of the Army, halting unneeded weapons programs, the unfinished fight in Afghanistan. But Gates knew only one topic really mattered: Iraq. The country Bush had set out to liberate was turning into The Road Warrior, with more bombs. Donald Rumsfeld's approach—"go to war with the army you have, not the army you might want"—had helped fuel the chaos. All the American power and prestige Gates had fought for decades to preserve was disappearing. He took the job.
When Gates arrived at the Pentagon in December 2006, without aides or entourage, he learned that few people in the building shared his sense of urgency about Iraq. Part of this was institutional: The Goldwater-Nichols Act of 1986 essentially splits the military in two—relatively small, regional commands do the fighting, and everyone else does the conceptualizing, training, and gear-buying. But the bigger hurdle was attitude. Iraq was important, the Pentagon's prevailing wisdom went, but so were a whole range of other conflicts just over the horizon. "There wasn't any kind of dedicated place in the institution where people were coming to work every day saying, 'What can I do to help the people downrange today?'" Gates says. "And that got me—" His lips tighten. His eyes narrow. He takes a breath. "It made me very impatient."
Click to enlarge infographic.
Source: Department of Defense
Just two months into Gates' tenure, The Washington Post revealed that Walter Reed Army Medical Center was keeping wounded soldiers in moldy, mouse- and cockroach-infested squalor. Gates fired the general in charge. Then he fired the secretary of the Army and forced out the Army's surgeon general. On Rumsfeld's watch, no one got fired for incompetence—not even after the Abu Ghraib prison debacle. Gates was clearly different. "I can't tell you how cathartic, how refreshing that was," says Ryan Henry, a top aide to both secretaries.
But replacing bureaucrats is easier than diverting whole bureaucracies. Gates found that out as soon as he began acting on his promise to focus on waging war, not planning for it. He knew that soldiers were driving thousands of Humvees with substandard armor and that improvised explosive devices, which easily pierced the vehicles' thin skins, had caused 70 percent of US casualties in Iraq. The Army's answer to the pressing need for hardened vehicles was to keep pouring billions of dollars into Future Combat Systems, a program that was supposed to yield a next-generation networked, lightly armored infantry vehicle by, oh, 2016 or so.
Meanwhile, in one part of Iraq, hard-shelled trucks called MRAPs (mine-resistant, ambush-protected) had withstood hundreds of attacks without a single US fatality. But in May 2007, just 64 were delivered into the field—they were considered too big to use anywhere but Iraq, and the Army already had Future Combat Systems going. Gates learned about MRAPs not from his generals but from an April 2007 article in USA Today. "Nobody wanted the things, because they were afraid they'd wind up with thousands of them in a big car park at the end of the war," Gates says. "My attitude was: If you're in a war, it's all in. I don't care what we have left over at the end."
So Gates ordered a task force to figure out how to deliver 1,000 MRAPs a month by 2008. This was, to put it gently, crazy talk. Typically, defense contractors crank out just a few hundred armored vehicles a year. But task force chief John Young set up a plan to buy 17,000 specialized tires per month (Michelin, the sole supplier, was producing less than 1,000) and 21,000 tons per month of high-strength ballistic steel. It would eventually cost $25 billion—a lot of money, even at the Pentagon.
Gates put Young's plan into practice. He asked Congress for permission to expand manufacturing lines with $1.2 billion from other programs, and he activated a rarely used Cold War law to force steel makers to prioritize sales to the Pentagon's MRAP manufacturers. Monthly MRAP deliveries climbed to 1,189 by the end of the year. Today, there are 13,000 MRAPs deployed in Iraq and Afghanistan. IED attacks have gone up, but in the 325 bombings involving MRAPs in Afghanistan so far this year, only five servicemembers have died.
The Gates Doctrine was emerging: Spare nothing to win today's war. Don't let the future distract you from the present day.
As a veteran of the national security and intelligence communities, Gates is both a defense outsider and a Washington insider. The son of a Wichita, Kansas, auto parts dealer, he was an Eagle Scout who dreamed of becoming a doctor—dissecting rats and cats in his parents' basement to get ready. He ended up majoring in history at William & Mary and then landed in the master's program at Indiana University. In his memoir, Gates claimed he met with the CIA recruiter there on a lark. "I thought I could get a free trip to Washington," he wrote.
Gates spent eight years as a junior analyst and an Air Force intelligence officer, then joined Nixon's National Security Council staff in 1974. Administrations changed, and political parties swapped control of the White House, but Gates remained. On the old boys' network, he had become a central node. He advised Carter on the Iranian hostage crisis, sized up Gorbachev for Reagan, and wrote George H. W. Bush's war aims for Operation Desert Storm.
All the while, Gates was learning how to bend a bureaucracy to his will. As a deputy national security adviser to the first President Bush, Gates took charge of the Deputies Committee, an interagency group responsible for the nuts and bolts of national security policy. The committee was a mess: rambling, inconclusive, a haven for back-channelers and leakers. Gates reined it in, ensuring no meeting lasted longer than an hour and that every one ended with a decision. Even the scuttling of his 1987 nomination to head the CIA didn't stop him. (Opponents alleged Gates, then the CIA's number two, hadn't done enough to stop the Iran-Contra scheme.) When Bush nominated him again four years later, Gates defused his critics with self-effacing humor and humility and was confirmed easily.
He left government in 1993; about a decade later he became head of Texas A&M and, once again, cleaned house. He replaced underperforming administrators with more- scholarly-minded deans, sending a message to an insular bureaucracy to focus on academics. A&M became one of the top public- service universities in the country and created hundreds of new academic positions.
Such a record should have told the current Pentagon establishment what to expect from their new boss. But to them, he turned out to be inscrutable. In some meetings, Gates would rarely speak; in others, he told stories from his Cold War glory days or cracked jokes about Washington's stuffed shirts. Rumsfeld was famous for intimidating people and bruising egos; Gates never interrupts. He can be stiff and reserved, until emotion comes gushing out. During one speech, recalling the death of a marine, he nearly broke down in tears, surprising even longtime friends. Gates doesn't travel much on the Beltway's social circuit, instead spending off-hours with his wife and a small cadre of aides. He smokes cigars, drinks Belvedere martinis with a twist (the first President Bush weaned him from gin to vodka), and watches trashy movies—Transformers and Wolverine were recent favorites.
Gates is also unforgivingly tough on failure. In August 2007, an Air Force unit mistakenly flew six nuclear warheads across the US on a B-52—a cardinal sin to an old Cold Warrior like Gates. Later, when Air Force chief of staff Mike Moseley briefed Gates on the incident, Gates asked him how many generals were going to get fired over the mishap. Moseley was taken aback; he said he wanted to spend time fact-finding first. More than 90 officers and airmen were eventually relieved or reassigned.
But there was a bigger problem with the Air Force. The service saw itself as the high tech deterrent against an apocalyptic encounter with another superpower. Current conflicts—and weapons for those conflicts—got short shrift. Unmanned aircraft like the Predator are cheap (compared to planes with pilots on board) and flexible, and they provide fast, useful intelligence to troops. But despite having been at war for nearly six years, the Air Force had fewer than a dozen Predator air patrols, or orbits, over Iraq and Afghanistan. US commanders were getting increasingly frustrated with the shortage.
In April 2008, a second task force—headed by Brad Berkson, a former partner at the consulting firm McKinsey & Company—investigated drone operations headquarters at Creech Air Force Base in Nevada. Berkson found a host of inefficiencies limiting drone time in the air. They were flying for only 20 hours a day, and some of the Nevada ground control stations used for practice in the daytime were simply shut down at night, instead of being used to control drones over the battlefield.
The Air Force brass thought the idea of the head of the entire freakin' military sending staff to spend this much time down in the weeds was, in the words of one former senior Air Force officer, "just amateurish." Gates found their recalcitrance equally frustrating. "I had to go outside the bureaucracy to get any kind of urgent action," Gates says. In late April, he gave a talk at the Air War College, one of the service's intellectual hubs, and told the assembled fliers that reform was going too slowly: "Because people were stuck in old ways of doing business, it's been like pulling teeth." Gates knew that what he said was impolitic; after the speech he reached Moseley at his father-in-law's home in Texas to assure him that he hadn't meant to single out the general or the Air Force.
Moseley got the message anyway. The Air Force increased the number of drones over war zones; today there are 37 orbits over Afghanistan and Iraq. But drones weren't at the heart of the Air Force's strategy. What the service really wanted was the F-22 Raptor. At $250 million a pop, this next-gen superjet is unquestionably a champion dogfighter, all but invisible to radar and able to fly at least Mach 1.5. It's decades ahead of anything out of Moscow or Beijing.
Against insurgents and terrorists, however, F-22s are of little use compared to drones. So Gates wanted to cap F-22 production at 187, a level set by Rumsfeld, and emphasize drone use. Yet Moseley and Michael Wynne, secretary of the Air Force, kept lobbying for more. Raptors, they said, were essential replacements for the aging US aircraft fleet.
A couple of weeks after his speech at the Air War College, Gates met with the Joint Chiefs and a few other officials to talk about a strategy document. It included a line about the US accepting some risk in fights with superpowers in order to win asymmetric, unconventional conflicts. Moseley, a former fighter pilot, said that such a risk was unacceptable, that he needed those Raptors. Representatives from the Army, Navy, and Marines all registered similar discontent. They wanted their future war gear, too. "They kept making the case over and over. You would've thought someone's children we're being held hostage, how they carried on," a former senior defense official says.
Gates sat through it silently for about an hour. Finally, he told them he wouldn't ask Congress for any more Raptors. "It was like a cold shower. Like, 'Wow, what just happened here?'" another former official says.
Wynne and Moseley took one more crack at Gates at yet another meeting. The secdef wouldn't budge. "You know, Buzz," Wynne told Moseley afterward, "I think that just sealed our fate."
An internal DOD investigation into how the Air Force had accidentally shipped to Taiwan four fuses used in nuclear missiles didn't help. Gates read it and asked for Wynne's and Moseley's immediate resignations, but the fuses may have been just an excuse. "It was so spylike, to claim it was about the nuclear incident," a former Air Force official familiar with the situation says. "It was an opportunity. It had all the right labels."
By 2009, changes to the status quo, combined with a successful counterinsurgency push in Iraq, resulted in adjusted attitudes at the Pentagon. The new Air Force chiefs were talking about how awesome drones were. Pentagon staffers were talking about asymmetric war. Anyone discussing showdowns with China or Russia tended to use the same theoretical tone one might employ in considering war with Alpha Centauri.
Still, these changes were marginal compared to the $500 billion-a-year spending machine. Now, $300 billion of that was sacrosanct, going to troops, operations, and maintenance. But the rest went to the Pentagon's deeply odd process of developing and acquiring new weapons. Among the ongoing projects when Gates came aboard: a constellation of five "transformational" communications satellites that talk to one another using a technology that hasn't been shown to work, a laser-equipped 747 designed to zap incoming missiles (which had its first test fire last summer after 13 years in development), a presidential helicopter with a kitchen that can heat up meals after a nuclear war, and Future Combat Systems—the Army's $160 billion, grand modernization project, due to actually get high tech gear to troops by 2011. "You ever read Superman comic books?" asks Eric Edelman, the former Pentagon policy chief. "Well, acquisitions is like the Bizarro universe. Everything is reversed; the world is square, not round."
Every secdef from McNamara to Rumsfeld tried to cut over-budget, long-delayed weapons programs. Usually, though, their efforts leaked to the press and Congress, who hit them with a tsunami of tears over lost jobs and weakened national potency. Starting in 1989, then-secdef Dick Cheney (before he became a supervillain) tried four times to ax the Osprey, an aircraft that takes off like a helicopter and cruises like a plane. It took $26 billion, 30 dead crewmembers, and 25 years of development, but the Osprey eventually flew. Even Cheney couldn't stop it.
Gates thought his circumstances gave him a better shot. Even amid two wars and a collapsing economy, he had already lived through one scandal, and he was the only cabinet secretary to serve both Bush and Obama. "I decided to take full advantage of the opportunity," Gates says. He told his aides to forget about the economy, about generals and defense contractors and all the other extraneous political bullshit. "Let me worry about the politics," he said.
Then he made his deliberations covert. "I don't want this leaking out in pieces," he told his staff. "We'll get eaten alive." For the first time, everyone involved in the process had to sign a nondisclosure agreement. Gates' team set up an exclusive reading room for the budget documents. Only top-ranking generals—four stars—were allowed inside, and they were not permitted to take the briefings out.
Starting on January 6, Gates and a handful of advisers began meeting regularly. "Everything is on the table," Gates told them. The group would get a white paper on a given issue—missile defense, fighter aircraft, ground forces—and Gates would review the options on what to keep or kill. Gates wouldn't say outright what he wanted to do with a given program; that way, no one would have details to leak. But everyone knew cuts were coming. Under the Bush administration, Pentagon spending had gone up 75 percent in eight years. "You need a cut to force the institution to make changes to the system," says Berkson, who coordinated the budget deliberations. "You need that pressure."
In the end, Gates cut the satellites, the nuke-proof helicopter, the laser-firing jumbo jet prototype, the Future Combat Systems trucks, and, most symbolic, the F-22. Each one of these strike-throughs meant billions of dollars and thousands of jobs lost in dozens of congressional districts. Taken together, they represented the biggest reorg of the Pentagon in a generation.
After the April budget announcement, Republican senator James Inhofe of Oklahoma said that Gates was "gutting our military." One congressional committee after another voted to keep building F-22s and other Bizarro projects. Gates and the Pentagon "need to learn who's in charge, and the Congress is," said Democratic representative Neil Abercrombie of Hawaii. Not even Obama's threats to veto any budget with F-22s had an effect. The jet had become a symbol of resistance to the Gates Doctrine. By one tally, the Raptor had 45 supporters in the Senate. Gates had only 23 backers.
In mid-July, the weekend before the crucial vote, the White House and Gates' team started lobbying. Gates assured senator John Kerry that the Massachusetts Air National Guard wouldn't be severely impacted, and he reportedly warned the CEO of Raptor-maker Lockheed Martin that if his company lobbied in favor of the F-22, Gates would cut other Lockheed contracts. The new Air Force secretary told Wyoming senator Mike Enzi he didn't want any more Raptors anyway. The following Tuesday, the Senate voted 58-40 to stop production of the Raptors. Gates had won.
Aboard his plane, however, the secretary tries to downplay the importance of the budget votes. This is a onetime, temporary win over the square planet, not some wholesale rewriting of the rules, he insists. "Given the nature of the Pentagon, if you're in the middle of a war, you're going to have to have a lot of direction from the top, to break down bureaucratic barriers and get people to move out with a sense of urgency," he says.
Now the secretary of war is working on phase two of his plan, speeding up a once-every-four-years grand strategy review and working on even bigger changes in next year's budget. For decades, the Pentagon prepped itself for a straightforward set of superpower wars because ... well, those were the battles the US knew how to prepare for. It bought exquisite high tech weapon systems because they had the coolest capabilities, not because they necessarily countered any threats.
At long last, a changing world may be changing the Pentagon. Gates says he's trying to build an organization prepared for threats that defy present-day categorization—terror groups with bigger and better weapons and organization, and superpowers like China and Russia adopting the tactics of guerrillas. "Conflict in the future will slide up and down the spectrum," Gates says. "You're not only going to have irregular warfare over here and high-intensity conventional war over here." But every case will still require a pragmatic approach to strategy and equipment, even if that seems to clash with Gates' "all in" approach to war. Stanley McChrystal, the man Gates named in May to be top general in Afghanistan, has asked for more troops. Gates is "deeply skeptical"—his understanding of the Soviet experience there tells him more grunts may not be the way to defeat the Taliban.
After three years under Gates, the Defense Department is finally learning the right lesson: You wage war with the enemies you have, not the ones you wish you had.
Contributing editor Noah Shachtman (wired.com/dangerroom) wrote about ionospheric research in issue 17.08.

From Danica Patrick's book, "Crossing the Line"

Danica on describing what she learned at a young age in a male dominated sport in England while being trained to compete in Formula Race car driving:  Being a Girl described me, but did not Define me.  Losers make bad choices.  Winners make the right choices.  Peer pressure and situations that tempt your good judgement are where the weak-minded get weeded out from the strong.  It was an issue of discipline which was essential in her success or failure as an athlete.

On her description of partying:  They're always the same.  People drink, they dance, they get stupid, and then they puke or pass out.

On her reply to her host in England who was a male chauvinist telling her to "fetch" something for him:  "Are your arms and legs broken?  Go get it yourself." :-)

On letting her actions speak louder than words:  "There was nothing I could say that would prove my point better than going the fastest or winning races.  In the end, the jerks who doubted me usually ended up just feeling stupid."  (Maybe they were JUST stupid!).

Wednesday, October 7, 2009

Tuesday, October 6, 2009

That's why it's better to tell the truth then to lie...

10 Gaffes by Doomed CEO's

"When markets are in trouble," wrote John Kenneth Galbraith in 1954, "the phrases are the same: 'The economic situation is fundamentally sound' or simply 'the fundamentals are good.' All who hear these words should know that something is wrong."
The famed economist was writing about the 1929 stock market crash, but Galbraith's insights are as timeless as he intended. Beginning in 2005, there were signs that a supercharged real estate and financial boom were getting out of control. By 2007, the apparatus was starting to overheat, and in 2008, as we all know, the system nearly melted down. Yet right up till the moment the gears seized, many of America's corporate bosses continued to insist that the fundamentals were sound. Here are 10 of the most ignominious reassurances from the Great Recession that began in 2007:
Stanley O'Neal, CEO, Merrill Lynch: "[The subprime problem is] reasonably well contained. There have been no clear signs it's spilling over into other subsets of the bond market, the fixed-income market, and the credit market."—July 28, 2007, at a conference in London
What happened next: Merrill ended up losing more than $50 billion on mortgage-backed securities, including subprime loans, which imperiled the entire firm. O'Neal left Merrill in November 2007 and was replaced by John Thain.
[See how the bailouts could have gone better.]
Charles Prince, Citigroup: "We see a lot of people on the Street who are scared. We are not scared. We are not panicked. We are not rattled. Our team has been through this before."—Aug. 3, 2007, in an interview with the New York Times
What happened next: Bad real estate bets led Citi on a money-losing binge, forcing Prince to step down in late 2007. In 2008, the bank reported an unprecedented $28 billion loss. Citi has stayed in business thanks to $45 billion in aid from the U.S. government, which effectively owns one third of the bank.
Angelo Mozilo, Countrywide Financial: "We continue to be bullish about the long-term prospects of both Countrywide and our industry."—Oct. 26, 2007, in a conference call with analysts
What happened next: Bank of America bought Countrywide for about $2.5 billion—a fraction of its former value—in 2008, as housing was on the verge of a meltdown and disputes over Countrywide's lending standards were intensifying. In April 2009, BofA said it would retire the Countrywide name. In June, the Securities and Exchange Commission charged Mozilo with insider trading and fraud.
[See where bailout money goes to die.]
Martin Sullivan, AIG: "We believe we have a remarkable business platform with great prospects that represent tremendous value . . . . AIG is well positioned to capitalize on current and future opportunities."—Dec. 5, 2007, in a presentation to shareholders
What happened next: AIG's share price plunged as investors worried about swaps AIG had sold to insure mortgage-backed securities that were suddenly falling in value. Sullivan left in June 2008. By September, AIG was insolvent, necessitating an $85 billion bailout that's the biggest in American history.
Alan Schwartz, CEO of Bear Stearns: "Some people could speculate that Bear Stearns might have some problems . . . since we're a significant player in the mortgage business. None of those speculations are true."—March 12, 2008 on CNBC
What happened next: Bear suffered a swift bank run as clients withdrew their money and its capital ran out. Two days after Schwartz's appearance on CNBC, Bear effectively collapsed. JPMorgan Chase bought the firm in a government-brokered deal for an ultimate price of $1.2 billion, about 95 percent less than Bear's peak value in 2007.
Richard Syron, Freddie Mac: "We are confident that the capital we are raising will enable us to both advance our mission and increase our returns to shareholders."—May 14, 2008
What happened next: The federally chartered housing agency became insolvent in September 2008 and was taken over by the government, virtually wiping out the stock. Syron stepped down. Freddie Mac has received about $51 billion in federal bailout funds so far.
[See 4 problems that could sink America.]
Richard Fuld, Lehman Brothers: "Our core franchise and our culture are strong. Our capital and liquidity positions have never been stronger."—June 16, 2008, on a conference call with analysts
What happened next: With clients pulling their money from Lehman accounts, the firm ran short of cash. Fuld reportedly turned down a financing offer from Warren Buffett, perhaps because he thought a government bailout—like that of Bear Stearns—would come with better terms. But no bailout materialized, and Lehman filed for bankruptcy on Sept. 15, 2008.
Rick Wagoner, General Motors: "Under any scenario we can imagine, our financial position, or cash position, will remain robust through the rest of this year."—July 10, 2008, answering questions after a speech in Dallas
What happened next: GM ran out of cash by December and stayed in business thanks to government funding that now totals $51 billion. As part of its reorganization GM declared bankruptcy on June 1, 2009.
[See why GM is ready to rebound.]
John Thain, Merrill Lynch: "Right now we believe that we are in a very comfortable spot in terms of our capital." —July 17, 2008, on a conference call with analysts
What happened next: Merrill nearly suffered the same fate as Lehman Brothers, with spooked clients withdrawing their money and investors driving the share price downward. With a collapse possible, Bank of America bought Merrill Lynch in September 2008 for a final price of about $29 billion, far below Merrill's value a year earlier. Thain left Merrill in early 2009, following the controversy over $3.6 billion in bonuses paid to Merrill bankers right before the BofA merger became official.
Daniel Mudd, Fannie Mae: "If we can get through this rough patch—and everybody's pulling on the same rope, I think, to try to get through this rough patch—on the other side of it is a very strong future for housing."—Aug. 20, 2008, in an interview with radio host Diane Rehm
What happened next: Like Freddie Mac, Fannie Mae became insolvent in September 2008 and was taken over by the government. Mudd left. Fannie Mae has received about $45 billion in federal bailout funds so far. Some analysts think the housing market could take 10 or 20 years to fully recover.
- With Danielle Burton, Carol Hook, Jennifer O'Shea, and Bobbie Sauer

A hopeful sign...

The economy sure good use a better Holiday Shopping Season than last year.